Accessibility of Mental Health Care: Insurance, Private Pay, & More

This is a long one, but it’s important (especially in the midst of a government shutdown over healthcare).

Let me start by saying, I believe healthcare—including mental health care—is a human right. I believe everyone should have access to skilled, compassionate mental health support regardless of their income, gender identity, religion, political beliefs, disability status, sexual orientation, race, nationality, age, employment status, or any other variable you can come up with. I believe therapy should be accessible to everyone.

However, our system—what Dr. Jennifer Mullan, author of Decolonizing Therapy, calls the “Medical Industrial Complex” (MIC)—is seriously flawed, and only getting worse (yes, Republican members of Congress who passed the Big Bad Billionaire Budget Bill this year, I’m looking at you).

I’m not going to spend this post detailing all the ways in which the MIC here in America is disaster. But I do want to take some time educate everyone on a few basic issues pertaining to the accessibility of therapy. The basic issues are:

1.     Therapy is expensive

2.     While insurance can make therapy more affordable (for those who have it), many therapists don’t take insurance—and more are leaving the insurance world every day.

The common misconception is that therapists don’t take insurance, and instead choose to charge high private pay rates, because they want to make a lot of money. What the average client or consumer of mental health care doesn’t understand is just how difficult insurance companies make it for therapists to work with them. The money is part of it, yes. But it’s not the whole story. So the next time you’re looking for a therapist, and you get sticker shock when you see that the cost of a session is between $150-$200 per hour, remember the following six points:

[TL:DR—When the insurance company dictates care, everybody loses. Client privacy, quality of care (including frequency, length, and type of therapy), on-time or consistent payments, and whether a therapist receives a livable wage are all controlled by corporations whose only priority is their profit margins. Skip to the end to understand private pay rates.]

Using insurance to cover therapy compromises the privacy of your mental health records.

Billing insurance for therapy requires billing under a diagnostic code. Following an intake, your therapist will be required to make a diagnosis, which will be submitted to the insurance company and will become part of your permanent medical record. One of the first things I learned in graduate school was Don’t diagnose in the first session! You barely know the client. There is so much they haven’t told you yet. There are so many pieces of the puzzle you’re still missing. The depression symptoms you see now could be bipolar disorder. The anxiety they’re reporting could turn out to be a result of ADHD. The neurodivergent vibe they’re giving could be a result of developmental trauma. You just don’t know. It will take time to figure it out.

But what nobody told me in school is that insurance companies require a diagnosis in the first session.

So what happens after you’ve diagnosed a client in the first session and, six months down the road, you realize that you got that diagnosis wrong? This happens all the time. In this case, you make a new diagnosis, and begin billing subsequent sessions under the new diagnosis. What happens to the old diagnosis? Does it get removed? No. Old diagnoses just accumulate. All the diagnoses you’ve ever received from doctors, therapists, psychiatrists, etc., are all still in your medical record. There is no easy way to determine which ones are correct and which ones aren’t. So when you apply for life insurance, and the insurance company asks for your medical records, and they see that fifteen years ago, you were diagnosed with bipolar disorder, they don’t care that it really turned out to be PTSD and you received treatment and you’re doing fine now. They may deny your application anyways.

In addition to diagnosis-related issues, because the insurance company is paying for your treatment, they have the right to demand your records at any time. This means that the notes your therapist keeps—all the sensitive personal information you’ve shared about your past, your relationships, your fears and regrets and dreams—can be requested and reviewed by any number of insurance company employees. Therapists know this, and they try to be sensitive to what they record in your records. But this leads to another problem with insurance.

Accepting insurance places an administrative burden on therapists.

The therapist has to credential with the insurance company—often a long, cumbersome, and annoying process. The therapist has to submit claims to the insurance company. The therapist has to get on the phone and argue with the insurance company if a claim is rejected, has to call and find out why they haven’t been paid on time, has to compile and submit records if the insurance company demands an audit or review of a file. While these unpaid hours are a bit annoying, they are a part of doing business.

The primary administrative burden that I feel when it comes to insurance, however, is the constant burden of proving “medical necessity.” Remember how therapy has to be billed under a diagnosis? This is because the insurance company will only pay for treatment that is considered “medically necessary,” that is, relevant to a medical diagnosis. So when I write my notes, I have to pretend that the insurance company is going to read each one, and I have to make sure that I can justify each and every session as medically necessary.

Sometimes this is easy: the focus of the session is on managing acute symptoms of anxiety, depression, or trauma. But often, this requires some mental gymnastics. How do I prove “medical necessity” when we’re talking about relationship conflict? Or self-compassion and shame? Or trying to figure out what career will be most satisfying? Or issues of sexual communication with a partner? And what about a wonderful session where a client is telling me all about how their symptoms have improved and aren’t bothering them anymore, and now they want to work on enriching their life, getting in touch with their values, growing in a sense of identity or spirituality or life purpose? How do I prove “medical necessity” enough to enable my client to continue having access to the care that they’re benefitting from?

So consider for a moment: A therapist accepting insurance has to walk a tightrope with each and every session note—not so much information that their client’s privacy is compromised, but enough information to prove “medical necessity.” The mental burden of this process detracts from a therapist’s ability to write concise, personally meaningful notes that move treatment forward. (I find this part a little more than annoying.)

What about if you mess up and you don’t sufficiently prove medical necessity? That brings me to my next point.

Accepting insurance can pose a financial risk to therapists.

If an insurance company requests a review of a file and deems that the treatment that’s been provided for the past several months was not really “medically necessary” after all (or if there are any other issues related to eligibility, changes in coverage, etc.), they can—and will—take back the money they have already paid the therapist. This can be thousands of dollars, from sessions months back—money that the therapist has already spent on their mortgage, groceries, gas, or personal medical bills. This can sink a small private practice.

This is called a “clawback.” When an insurance company claws back money they’ve already paid to the therapist, the therapist must now turn to the client for payment, or else eat the loss. Imagine being a therapist who has to go to a client, with whom they’ve been working for months, whom they care for, whose struggles they know intimately, and say, “Actually, now you owe me $2000." Imagine being the client, who has put their trust in a therapist and relied on them for consistency, care, and support, and suddenly hears that they owe this therapist $2000 they don’t have. The impact on the therapeutic relationship—not to mention the bank accounts of everyone involved—is devastating.

Insurance companies also receive no negative consequences for not paying on time. Therapists can spend hours chasing down missing payments from months ago, while shorting their own paychecks to make up the difference. Which brings us all the way back to the topic of payment.

Insurance companies pay low rates for sessions, and their rates do not increase with inflation.

If you’re a therapist in private practice, you have a hard choice to make: accept private pay only, and retain control over your finances, even though you know the average person can’t access your care, or accept insurance, and relinquish any hope of getting regular raises. Many people with corporate jobs can reasonably expect a “cost of living” increase in their paycheck every year. Others can expect a raise as they pass employment milestones or obtain promotions. If you’re a therapist who accepts insurance, however, you have little to no control over when rates will increase—and they can stay static for years (and I mean, longer than fifteen years in some cases). But as inflation creeps up, this means you are being paid a few percentage points less every year, year after year after year.

And that’s if rates stay flat. Often, they don’t. Rates for sessions can be abruptly decreased without warning or explanation (or for ridiculous reasons like, “Your client did a telehealth session in their car instead of their home, therefore, we’re paying you less”). A $5 decrease might not seem like much, but it adds up. Most of us would feel pretty unhappy with a sudden $400 cut to our paychecks every month.

Low rates take a toll on therapists. We want to serve everyone who needs care; we truly do. But we are also running businesses and supporting households, and once you subtract business expenses, taxes, personal health insurance premiums, etc., what sounds like a high hourly wage can end up being just a little more than working at Starbucks.

Insurance can negatively impact the treatment a therapist is able to provide.

Often, this is related to cost. I have seen a push from insurance companies lately to make 40-minute sessions the standard of care (because they’re 25% cheaper). The vast majority of therapists and clients, however, prefer 50-60 minute sessions. It’s incredibly difficult to do effective therapy—particularly on complex or activating issues like trauma—in 40 minutes. If you’ve ever been to therapy, you know there’s a warm-up period in the beginning of the session. If you’re not a therapist, you may not consider that there also needs to be a cool-down period at the end of the session; it’s irresponsible to open something up if you don’t have time to put it back before a client has to walk out the door. Once you subtract the warm-up and cool-down from a 40-minute session (and the lengths of these periods vary based on an individual client’s needs), it can leave as little as 15-25 minutes to get any actual therapeutic work done. But insurance companies, looking for any way to save themselves some money, will state that hour-long sessions are “extended” sessions, only justifiable for severely mentally ill clients, clients in crisis, or clients whose symptoms cause “demonstrable functional impairment,” putting a therapist in fear of clawbacks and financial instability.

There is also pressure from insurance companies for therapists to provide only “evidence-based” treatment. While this sounds good—of course you’d want to do the kinds of therapy that are proven to help, right?—it’s more complex than that. All “evidence-based” really means is, “we got enough money to do research to prove that it works.” Or else, “this kind of therapy is manualized and standardized enough that we can create a quantitative analysis of its results.” Do you want to go to a therapist and receive treatment that’s straight out of a manual rather than tailored to your personality, goals, and needs? I didn’t think so.

Let me give you a little example of “evidence-based” treatment. In my first job out of grad school, I was trained in a popular, short-term, intensive family therapy modality often provided (or ordered) by courts to youths struggling with conduct issues, substance use, etc. A lot of money has gone into researching this modality, and the results seem positive: over and over again, studies show that the majority of clients improve on measurable outcomes.

But what are these measurable outcomes? Literally only these two things: Was the client arrested in the 90 days following treatment? And was the client sober in the 90 days following treatment?

Pretty low bar, right?

They weren’t measuring improvements in anxiety or suicidal thoughts, reduced family conflict, increased engagement in school, or any long-term outcomes like rates of adult incarceration, gainful employment, or substance abuse. It was two checkmarks at the three-month mark. That’s it. But they can honestly stand before a judge and say, “This is evidence-based treatment.”

Whereas a somatic therapist who integrates rich modalities like Hakomi Method, Gestalt, Jungian dream analysis, or movement and dance, may consistently see profound transformation in her clients and have a deep conviction that her treatment works—but if she can point to only minimal research to prove it, the insurance company all that interested. They want to see a list of standard interventions they can understand tied to specific symptoms that are diagnostic criteria in the DSM.

Ultimately, insurance companies are out to make money, not to help people.

Never forget this: The insurance company is not your friend. Their number one business strategy is to provide you with as little care as possible, at the lowest price possible, in order to drive up their profit margins and make their stakeholders happy. We saw ugly proof of this in the recent lawsuit of United Healthcare. After Luigi Mangione shot and killed the CEO of United Healthcare, United Healthcare stock decreased. But this made the stakeholders angry, because they weren’t making as much money as they had expected—so they took United to court.

Profits increase every time a claim is denied, incentivizing insurance companies to deny as much care as possible. Denials can sometimes be overturned by an appeals process—but only 10% of patients follow through with this difficult, emotionally taxing process, meaning that most go without care ordered by their providers. To put this in perspective: American insurance companies’ profits for one year are enough to cover out-of-pockets costs for seven million cancer patients.

This final point is, to me, the most important. Why would I want to involve an entity in my client’s care who does not have my client’s best interest in mind? Or who (in a recent real-life case) might abruptly decide to terminate their contract altogether and disrupt continuity of care for half of my clients? Why would I want to place my income and my ability to provide for my family in the hands of a company who is determined to find every way to pay me as little as possible? It’s insanity. And yet many therapists do it anyways, because we want people to be able to access the treatment they need.

Eventually, however, many of us burn out on this system. The Medical Industrial Complex is tossed back and forth by policy changes, the whims of whatever political party happens to be in office, the ideologies of people who have no healthcare training or experience. That level of hypervigilance, of always watching to see which way the wind is blowing and trying to adapt in time, is exhausting. And so, in trickles—and sometimes torrents—therapists leave the world of insurance billing and move toward private pay.

I can hear you thinking, “Okay, that makes sense. But why are the private pay rates so high?”

Since I’ve already gone on for far too many paragraphs, I will leave you with a simple list:

• High rates for those who can pay them allow therapists to offer sliding scale rates to people experiencing financial hardship. If you need to make $130 per session to pay your bills, but you know a handful of your clients can’t afford more than $50 per session, then you have to set your rate at $160.

  
  

• Mental health providers (therapists, social workers, etc.) are among the lowest-paid Master’s-level professionals in the country. We often have just as much student debt as lawyers and engineers, but our average salary is a fraction of what lawyers and engineers can expect to make. (My first full-time job after earning my Master’s degree paid me below the poverty line.) The income ceiling for professionals at the top of their field is also much lower, since therapy is not a scalable business model (see point below).

  
  

• Therapy is a difficult business to scale. You can only see so many clients in a week, and you can only charge so much per hour. It’s not a model that works well in a capitalist society, where endless expansion is the sign of a successful business. To maintain some level of emotional wellness, most therapists have to keep their caseloads between 20-25 sessions per week. And face-to-face client hours are only one part of the work that goes into running a business.

  
  

• We don’t take home every dollar we bring in. There are business costs like office rent, business software, legal and accounting fees, the cost of continuing education or ongoing trainings, and taxes. In addition, therapists in private practice don’t have the benefits packages most people receive from employers; we don’t get a 3% match on our 401(k), short- or long-term disability if we become ill or injured, life insurance, reduced healthcare premiums, or even paid vacation or sick leave. We have to make enough money to cover those costs ourselves.

Many therapists feel a deep conflict between their desire to live comfortable lives, help their children go to college, take a vacation every now and then, and own a home, and the cultural belief that service and poverty go hand-in-hand. Our society depends on the helping professions—teachers, nurses, caregivers, therapists, childcare workers (side note: these are all female-dominated professions)—and yet because we believe that people go into these professions out of the goodness of their hearts, because they “feel called” or “have a passion,” we take that as license to pay these professions poorly. “If you really loved your job, you’d do it for free. You’re lucky you’re getting paid at all!” As if wanting to make a good living doing work you love is somehow asking for too much.

Ultimately, I believe that mental health is medical care, and should be treated as such. If you’ve ever looked at an Explanation of Benefits (EOB) letter after a doctor appointment, you may be amazed to see that your cardiologist or neurologist was paid $250 for a routine 20-minute visit. Even your PCP is paid $120-$180 for a brief office visit. If our healthcare system actually valued mental health care, therapists could easily be paid $400 per session; insurance companies are not exactly hard up for cash. And yet a therapist providing an entire hour’s worth of care is paid a fraction of this. (I’ve seen rates so low that they amount to a salary of less than $40,000 per year.)

I hope this post has shed some light on this complex topic. The truth is, apart from massive systemic change, there is no good answer. Whether a therapist accepts insurance or charges private pay, I guarantee you there is a part of them that feels conflicted about it. Spread this around to whoever needs to know. Only if we all work together can we create the systemic change we all need.